Car Industry

On-Demand Automotive Features add up to Billions

  • Why it matters

    Why it matters

    Automakers are planning to generate more sales from on-demand features that customers can purchase inside their cars. The change could generate tens of billions in additional sales and keep automotive banks lucrative, even as the market moves toward car sharing.

  • Facts

    Facts

    • Industry analysts estimate that automakers could earn an additional €155 billion by 2022 if they offer drivers the option of booking extra features in their cars through electronic payments.
    • Automakers and their financial services divisions have been investing in driving and parking apps as a precursor to developing their own payment processing software.
    • Automotive banks, which until now have turned large profits by offering credit for car purchases, are vying to move into payment processing for on-demand features.
  • Audio

    Audio

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On demand features may allow carmakers to boost profits, even as car sharing takes off. Source: DPA

In the near future, turning on the seat heater inside your car on a cold winter day could cost you. For that matter, so could extra horsepower and cruise control.

Major automakers like BMW, Mercedes and Volkswagen are planning to alter the way they offer customers extra features in an industry-wide shift toward on-demand services that analysts say could allow carmakers to generate tens of billions of euros in additional profits over the next several years. Automakers envision a future in which customers purchase driving apps, software updates, and even supplementary insurance, all from within their cars.

Carmakers’ financial divisions, which have traditionally drawn rich profits by offering loans to car buyers, are seen as playing a pivotal role in the new strategy since the processing of payments for on-demand features is, by itself, a potentially lucrative new business.

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